‘I don’t live in a mansion. It’s a 1930s house’: Richmond residents react to council tax rise

In the leafy London borough of Richmond, on the south-western fringes of the capital, there was quiet resignation at the chancellor’s announcement of a “mansion tax” on England’s most expensive properties. In an area where one-bed flats often sell for £300,000, and large, detached family homes regularly sell for upwards of £2m, “mansion” is seen as something of a misnomer. “It’s laughable,” said local homeowner Nick Miller, whose five-bedroom family home is on the market for £2m. “I don’t live in a mansion. It’s a 1930s house.” Boasting the largest of the capital’s royal parks, a thriving high street, highly rated schools and quick transport connections to the city, Richmond has long been a popular base for well-heeled Londoners, including among its longtime residents the broadcaster David Attenborough and actor Richard E Grant. Interactive The constituency of Richmond Park – which includes parts of Barnes, Kew, East Sheen and Richmond-on-Thames – is likely to be among the places most affected by Rachel Reeves’s property tax changes announced in the budget. Houses worth £2m or more accounted for 6.4% of sales in Richmond-upon-Thames over the past five years, according to Land Registry sales data, equivalent to almost one in 15 transactions. “In Richmond, £2m to £2.5m gets you a lovely house, but not a mansion by any means,” said Rory Clarke, a senior sales consultant in the local office of Hamptons estate agents. “The [new regime] isn’t ideal but shouldn’t impact someone owning a home at that level too much. I wouldn’t have thought it would cause an issue in the housing market in Richmond.” On Wednesday, Rachel Reeves revealed that from April 2028, owners of properties in England valued at £2m and over in 2026 will be required to pay an annual high-value council tax surcharge on top of existing council tax. The value of qualifying properties will not be based on asking or sale prices, but will instead be determined next year by the government’s Valuation Office Agency. There will be four price bands, meaning the surcharge will rise from £2,500 a year for properties valued between £2m and £2.5m, to £7,500 a year for those valued in the highest band of £5m and above. The surcharge will be raised in line with the consumer price index (CPI) measure of inflation each year. The surcharge is expected to raise £400m in 2029-30, slightly less than had been expected, and the revenues will be sent to central government rather than remaining with local authorities, as usually happens with council tax. Property analysts anticipate governments in the devolved nations may now look at similar changes. The measure broadly matches pre-budget leaks and aligns with Reeves’s pledge last month that those with the “broadest shoulders” should pay their “fair share” of taxes. “This is kind of what we thought would happen,” said Clarke. “[The introduction of the tax] is quite far away, but at least there is clarity where we stand and people now know what to expect.” Weeks of speculation in the run-up to the late budget about a possible property tax shake-up had already stalled the local housing market, according to Amy Reynolds, the head of sales at the local estate agent Antony Roberts. When it came it was better than feared. “The phone would be ringing off the hook if it was bad news,” she said. “I’m grateful it isn’t worse.” Reynolds believes the surcharge, which will mostly affect properties in London and south-east England, means the “north-south divide is getting sharper”. “Given that council tax hasn’t been comprehensively updated since 1991, it would be far more sensible to invest the time in revaluing all council tax bands,” she said. Older homeowners, or those who have owned their property for a long time and watched its value soar over the years, are expected to be hardest hit by the changes. This is the case for Nick Miller and his wife, Carolyn, who have lived in their detached home in East Sheen for three decades. After putting the house on the market in summer 2024, a sale fell through this spring and they have subsequently reduced the price several times to the current £2m asking price, meaning it remains within the surcharge bracket. “It won’t help our case – it’s just more burden for buyers,” said Miller, a retired corporate financier. “We may have a better chance if interest rates come down again in December.” Interactive In the short term, activity in the property market might pick up after the budget, “especially given the breathing space offered by a delay in implementation whilst the valuation exercise is conducted,” said Lucian Cook, the head of residential research at Savills estate agent. Longer term, Cook expects the measures to “act as slightly greater incentive for older homeowners to downsize and, in some cases, heavily mortgaged owners of high-value homes to move to a less-valuable property pushing some demand out of London into the commuter zone”. In addition, some sellers are expected to reduce their asking price to just below £2m to make properties more attractive to buyers. This was the case with previous stamp duty “ceilings”, where sales of properties above £250,000 were charged a 3% rate, instead of 1% for homes below that price, prompting buyers to offer £249,999 for properties that were on the market for a higher price. The Millers will also have to pay more tax in future on the income they receive from renting out a nearby home, which they originally bought for Nick’s parents. Among Rachel Reeves’s other announcements, the basic and higher rates of tax on property, dividend and savings income will increase by two percentage points. The move prompted an initial sell-off of shares in the UK’s largest housebuilders including Berkeley, Taylor Wimpey, Persimmon and Barratt Redrow, before they recovered slightly, because buy-to-let landlords represent an important group of buyers of new-build homes. The increase in property income tax rates will add “further pressure on landlords who own property in their own name”, but will not affect those who operate through limited companies, said Aneisha Beveridge, the head of research at Hamptons. “For individual landlords, who make up the bulk of the market and who are already squeezed by higher borrowing costs and previous tax changes, this could accelerate the trend of investors exiting the market,” she added. Property analysts and the Office for Budget Responsibility (OBR) have voiced concerns that this could reduce supply of rental property and thereby risks pushing rents higher. “Despite headline tax rates on expensive homes and landlords going up, the OBR don’t believe the new taxes will raise any money at all, with behavioural changes eating away at tax revenues,” Beveridge said.